By Jon Franz
What’s better than finding a buyer for your franchise? Finding four buyers.
That’s why we recommend that owners work with a business broker when they’re ready to sell. Our process isn’t exactly an online auction, but we do know how to optimize prospective buyers and get the best terms and highest offers for our clients. Here’s how our process works.
Step One: Package and list your business. We make sure your business is visible in all the right places without disclosing any in-depth financial details. Because we specialize in selling franchises, we know the most effective sites for attracting the attention of the most motivated buyers. We also have a large national database of buyers who are looking for franchise opportunities. As of this writing, we also have over 23,000 buyers in our database looking for a business just like yours.
Step Two: Screen potential buyers. When a prospect expresses an interest in your business, we send out a Non-Disclosure Agreement (NDA). Before we send any financial documents, we ask for information from buyers. We assess their business experience and their financial viability. We ask for proof of funds to ensure they have the means to secure financing for the deal. We screen out anyone who is kicking tires or trying to get inside information on a competitor or their employer.
Step Three: Collect offers from serious buyers. Occasionally, a seller will tell us that they already have a buyer for their business. We always recommend that they wait to see what other potential buyers might be offering. At the very least, competition means that every buyer will have a greater sense of urgency about making the deal happen. At any time during the process, our sellers can log into our system to see how many buyers have matched with their listing and view details about who’s considering making an offer.
When we talk to buyers, we tell them to lead with their highest and best offer; they understand that the seller has options and can move on to the next buyer or better terms. Having multiple bids for the business saves the seller time and resources that might be spent on negotiation with one buyer at a time.
Step Four: Help the seller evaluate the offers. We always leave the decision about which offer to accept completely in the seller’s hands. But based on our initial conversations before the business is listed, we can present the pros and cons of each offer. A local buyer might be able to close sooner, for example. The seller may prefer to sell to someone who will run the business themselves rather than be an absentee owner. They may prefer to sell to a veteran or someone with ties to the community surrounding the business.
Whatever the final result, we know that the owner is making an informed decision by comparing offers point by point. It’s not the same as an online auction, but the result is the peace of mind that they’ve received the best offer the current market will present.
For the past two years, we’ve averaged 4.2 offers for every franchise we’ve sold. More competition means better offers and better terms, and once in a while, even an offer above asking price. If we can help you sell your franchise, contact us here.
About the Author:
Jon Franz is the founder of Franchise Clearly. Since 2015, we have sold over $135M, he has led more than $110 million in closed sales and developed proprietary software that brings transparency to every deal. He holds an MBA in Finance from the University of Central Florida and is a Certified Business Intermediary.